Opinion

Acute Care Holdings, LLC v. Houston County, Tennessee

Court: Court of Appeals of Tennessee
Filed: Apr 20, 2026
Status: Published
Author: Chief Judge Frank G. Clement, Jr.
On the bench: Chief Judge Frank G. Clement, Jr.
Cited by: 0 cases
Authority: More cited than 40.2%

The opinion

04/20/2026

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

February 5, 2026 Session

ACUTE CARE HOLDINGS, LLC v. HOUSTON COUNTY, TENNESSEE

Appeal from the Chancery Court for Houston County

No. 2014-CV-434 Robert E. Lee Davies, Senior Judge

No. M2024-01734-COA-R3-CV

This appeal follows our remand in Acute Care Holdings, LLC v. Houston Cnty., No.

M2018-01534-COA-R3-CV, 2019 WL 2337434 (Tenn. Ct. App. June 3, 2019) (hereinafter

“Acute Care I”). The dispute involves the alleged breach by Houston County of a Letter of

Intent pertaining to the purchase of a hospital in Erin, Tennessee. On remand, the trial court

ruled in favor of the plaintiff, Acute Care Holdings, LLC (“Acute Care”), by granting its

motion for partial summary judgment on the basis that Houston County breached the Letter

of Intent. Thereafter, the trial court entered an Agreed Final Judgment awarding Acute Care

a judgment of $1,218,062.63 and prejudgment interest of $730,036.65. This appeal

followed. Finding no error, we affirm.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

FRANK G. CLEMENT JR., C.J., delivered the opinion of the court, in which THOMAS R.

FRIERSON, II, and W. NEAL MCBRAYER, JJ., joined.

Samuel P. Funk and Michael R. O’Neill, Nashville, Tennessee, for the appellant, Houston

County.

Robert E. Boston and Taylor J. Askew, Nashville, Tennessee, for the appellee, Acute Care

Holdings, LLC.

OPINION

FACTS AND PROCEDURAL HISTORY

The history of this case, as previously stated in Acute Care I, reads as follows:

By the fall of 2001, the only hospital in Houston County, Patient’s Choice

Medical Center (“PCMC”), was in financial distress and in danger of closing

its doors. Although the hospital had just recently obtained certification as a

“Critical Access Medical Center,” which would likely provide for a better

financial future, but not in the immediate future, PCMC lacked the capital or

revenue to continue operating long enough to benefit from the new

certification. Because PCMC was Houston County’s third largest employer

and a critical provider of medical services to the community, in order to

prevent the closure of the hospital, Houston County sought to purchase the

hospital from PCMC and then lease it to a hospital management company.

Around the same time, Acute Care Holdings, LLC (“Acute Care”),

which operated a nursing facility in Houston County, also considered buying

PCMC but determined that it was not feasible to do so. Nevertheless, its

inquiry into the matter ultimately resulted in the execution of a Letter of

Intent among Houston County, Acute Care, and PCMC pursuant to which

Houston County would endeavor to negotiate an asset purchase agreement

with PCMC to purchase the hospital and its assets and then lease the hospital

to Acute Care, which would manage the hospital.

The Letter of Intent, which was executed on February 29, 2012,

established the conditions by which Acute Care agreed to loan funds to

PCMC to sustain the hospital’s operations while Houston County and PCMC

negotiated an asset purchase agreement. In pertinent part, the Letter of Intent

provided:

As of March 1, 2012, [Acute Care] . . . and [PCMC] shall enter

into an interim management agreement for the [PCMC] facility

. . . wherein [Acute Care] agrees to assume operational

authority and control of the Facility under [PCMC’s] provider

number and license, to the extent permitted by law, and to

provide funding for certain improvements and operational

expenses, to be reimbursed at a later date by [Houston

County] to [Acute Care] if and when the Closing occurs.

[PCMC] shall execute one or more promissory notes . . . for all

expenses paid by [Acute Care] for operation of the Facility in

excess of the Facility’s revenue during the interim

management period, evidencing [PCMC’s] obligation to

repay such expenses in the event the closing does not occur.

(Emphasis added).

The Letter of Intent further provided that once Houston County

purchased the hospital, Houston County would lease the assets to Acute Care

to operate and manage[.]

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. . .

The Letter of Intent also provided a due diligence period whereby Acute Care

would inspect PCMC’s assets. The Letter of Intent also clarified the parties’

obligations to one another when the Letter of Intent was canceled or expired:

[Acute Care] shall have 30 days from the date of this Letter of

Intent (“Due Diligence Period”) to fully inspect the Assets and,

at its discretion, proceed with, or cancel the transaction. If

canceled, no party shall have any further obligations to the

others, except for the repayment of any promissory note(s)

signed by [PCMC] in favor of [Acute Care] for funds expended

by [Acute Care] for payment of improvements and operating

expenses during the interim management period. Unless

[Acute Care], in its sole discretion, gives [PCMC] notice that

it waives its rights to cancel the transaction, the transaction

shall be deemed canceled at the end of the Inspection Period.

Based on the agreement, if Houston County closed on the purchase of

the hospital within the agreed-upon deadline, Houston County would assume

PCMC’s obligations to Acute Care on the loans that kept the hospital in

business. If, however, the purchase did not close in accordance with the

Letter of Intent, Houston County would have no financial obligations to

Acute Care.

Acting pursuant to the Letter of Intent, Acute Care periodically loaned

PCMC the funds it needed to operate the hospital while Houston County and

PCMC negotiated the asset purchase agreement. When Houston County and

PCMC were unable to reach an agreement by the initial deadline, Acute Care,

Houston County, and PCMC executed amendments to the Letter of Intent

that extended the deadline to December 31, 2012, all the while Acute Care

continued to financially support PCMC. As each loan was made, PCMC’s

president, Ray Shoemaker, executed promissory notes to memorialize its

debt to Acute Care.

By November 25, 2012, Houston County still had not closed on the

purchase of the hospital. Thus, Acute Care sent Houston County a new

proposed Letter of Intent which provided that Acute Care would “continue

to manage the Hospital pursuant to the existing interim management

agreement . . . until the County acquires the Hospital, but in no event beyond

January 10, 2013.” It further provided that Houston County would execute a

promissory note in Acute Care’s favor to cover the cost of PCMC’s

November payroll. Houston County rejected the proposal.

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Houston County did not close on the purchase of the hospital by the

December 31 deadline; however, Houston County and PCMC executed a

purchase agreement in March 2013, by which Houston County would not

assume any of PCMC’s liabilities. Additionally, instead of awarding the

management contract to Acute Care, Houston County awarded the hospital

management contract to an entity owned by the County’s attorneys.

Thereafter, Houston County refused to reimburse Acute Care for the money

it expended to keep the hospital in business during negotiations.

On November 10, 2014, Acute Care filed a complaint for breach of

contract and unjust enrichment in Houston County Chancery Court, alleging

Houston County was liable to Acute Care for the more than $1.2 million

Acute Care expended during the interim management period. In its answer,

Houston County denied the allegations and asserted a number of affirmative

defenses, including the failure of a condition precedent.

Houston County filed a motion for summary judgment on November

16, 2017, wherein it contended that the County was not obligated to

reimburse Acute Care because it was undisputed the closing did not occur

pursuant to the Letter of Intent; thus, Acute Care’s only recourse was to seek

reimbursement from PCMC or its president Ray Shoemaker. Houston

County also sought dismissal of the claim for unjust enrichment because that

claim only applied when the parties did not have an enforceable contract, and

it was undisputed that the parties had an enforceable contract.

In its response to the motion for summary judgment, Acute Care

agreed that the purchase of the hospital did not close pursuant to the Letter

of Intent, which was a condition precedent to Houston County’s obligation

to perform. However, Acute Care argued that the non-occurrence of a

condition precedent is excused when the defendant prevents the condition

from occurring. Acute Care alleged that Houston County’s failure to

negotiate an asset purchase agreement pursuant to the Letter of Intent was

calculated to avoid the County’s obligations to Acute Care, and it asked the

trial court for additional time to conduct discovery so it could present

evidence supporting that allegation. The court granted the continuance, and

after taking additional discovery, Acute Care filed a supplemental response

to Houston County’s motion for summary judgment.

First, Acute Care contended that PCMC and Houston County reached

an agreement for the purchase of the hospital as early as September 2012,

well before the December 31 deadline, but the Mayor of Houston County

failed to sign the agreement. As evidence, Acute Care submitted a resolution

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of the Houston County Board of Commissioners dated September 17, 2012,

which acknowledged that the Commissioners reviewed Houston County’s

asset purchase agreement with PCMC and its management agreement with

Acute Care and approved the agreements “in all particulars.” The

Commissioners then ordered the Mayor and County Clerk of Houston

County “to execute, acknowledge, and deliver” the agreements on behalf of

the County.

As further support, Acute Care submitted an email exchange, dated

October 16 and 18, 2012, between Cindy Barnett, an attorney for Houston

County, and a loan representative from the United States Department of

Agriculture (“USDA”). The emails showed that Houston County had

obtained a USDA loan to purchase the hospital and to reimburse Acute Care.

In an email dated October 16, Ms. Barnett sent the USDA representative the

asset purchase agreement, the management agreement, and the

Commissioners’ resolution and indicated that the parties had agreed on all

material terms, and they were ready to close on the purchase of the hospital.

Acute Care also submitted the meeting notes from the December 6, 2012

meeting of the Houston County Board of Commissioners wherein the

Commissioners approved the management agreement with Acute Care and

directed the Mayor to execute the agreement.

For its part, Houston County presented evidence to refute the claim

that it had reached an agreement with PCMC before the December 31, 2012

deadline. Supporting its contention, Houston County submitted the asset

purchase agreement approved by the Commissioners on September 17, 2012,

and noted that the agreement was missing the purchase price. Houston

County argued that the Commissioners had approved a “form” of an asset

purchase agreement but not the agreement itself because Houston County

and PCMC had not settled on the material terms and did not come to an

agreement on the material terms until March 2013. Houston County also

submitted emails between Ms. Barnett and PCMC representatives sent in

October 2012, showing that PCMC was not satisfied with the Commissioner-

approved asset purchase agreement.

After a hearing on June 11, 2018, the trial court summarily dismissed

Acute Care’s breach of contract claim . . . [and] granted Houston County’s

motion to summarily dismiss Acute Care’s unjust enrichment claim, ruling

that “a plaintiff cannot recover [on] an unjust enrichment claim where there

is a valid contract, and it is undisputed that the [Letter of Intent] constituted

a valid contract . . . .”

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Acute Care appealed, arguing that the summary dismissal of its claims against the

County was error. In that appeal, Acute Care I, we reversed the trial court’s rulings and

remanded the case to the trial court for further proceedings.1

Following remand and the taking of additional discovery, Acute Care filed its

motion for partial summary judgment contending that the County breached the Letter of

Intent by failing to close after all requisite contingencies were satisfied. After the County

filed its response in opposition to the motion, the court heard arguments from the parties

on March 7, 2024. In the order entered on March 26, 2024, the trial court granted the motion

for partial summary judgment in favor of Acute Care, ruling in pertinent part:

The undisputed facts are that on two separate occasions (September

and October of 2012), the Houston County Board of Commissioners passed

a resolution directing the County Mayor, George Clark, to “execute,

acknowledge, and deliver” those agreements, which were approved in “all

particulars.” Acute Care also cites the Court to the emails of the County

Attorney, Mrs. Barnett to the USDA loan representative in which she

explains that the purchase price will be equal to the amount necessary to pay

the liabilities on PCMC’s balance sheet and that PCMC was not receiving

any cash. Finally, Acute Care points out that the closing memorandum for

the ultimate closing between the County and PCMC makes reference to the

same resolution approved by the Board of Commissioners on September 17,

2012, authorizing the execution of the asset purchase agreement with PCMC

and the management agreement with Acute Care. In other words, nothing

changed from the original closing documents under the Letter of Intent with

Acute Care after the expiration of the deadline of December 31, 2012, other

than the substitution of an entity owned by the County’s Attorney’s for the

management contract and the removal of the obligation to pay back the 1.2

million which Acute Care had loaned PCMC.

Considering these facts, even in the light most favorable to Houston

County, the Court concludes as a matter of law that Acute Care performed

all of its obligations pursuant to the binding Letter of Intent; that all of the

contingencies in the Letter of Intent were met; that the County

Commissioners specifically and expressly authorized the County Mayor to

execute the asset purchase agreement and management agreement prior to

Chancellor David D. Wolfe of the Houston County Chancery Court presided over the case prior

to the first appeal. Following remand, Senior Judge Robert E. Lee Davies presided over the case.

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December 31, 2012; that the computation of the purchase price was agreed

upon; and that the County Mayor’s failure to follow the directives of the

County Board of Commissioners resulted in a breach of the Letter of Intent

by Houston County.

(footnote omitted).

Following the grant of partial summary judgment in favor of Acute Care, the parties

entered an Agreed Final Judgment stipulating the amount of Acute Care’s damages. In

pertinent part, the final judgment reads: “The parties stipulate that under the Court’s March

26, 2024 Order (which either party may appeal) Acute Care’s damages for breach of

contract amount to $1,218,062.23, plus interest[.]”

This, the second appeal, followed.

ISSUES

Houston County presents two issues for our review:

1. Whether the trial court erred in construing the parties’ contract in a manner that is

contrary to: (a) this Court’s prior decision in this case, (b) [Acute Care’s] judicial

admissions made in this case, (c) the plain language of the contract, and (d) the

extrinsic evidence, including the testimony of [Acute Care’s] own witnesses?

2. Whether the trial court erred in granting partial summary judgment in [Acute

Care’s] favor: (a) based on an erroneous construction of the parties’ contract and (b)

when material issues of disputed fact exist?

Acute Care presents one issue: “Whether the trial court correctly granted summary

judgment in favor of Acute Care by concluding that Houston County breached the binding

Letter of Intent when it failed to close on its purchase of a hospital after all contractual

contingencies requiring the County to do so had been satisfied.”

STANDARD OF REVIEW

A trial court’s decision regarding summary judgment is reviewed de novo. “We

review de novo with no presumption of correctness a trial court’s decision on a motion for

summary judgment.” Thompson v. Memphis City Sch. Bd. of Educ., 395 S.W.3d 616, 622

(Tenn. 2012). When doing so, we must “view the evidence in the light most favorable to

the nonmoving party and must draw all reasonable inferences in that party’s favor.”

Godfrey v. Ruiz, 90 S.W.3d 692, 695 (Tenn. 2002). Summary judgment will be found

“appropriate when ‘the pleadings, depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any, show that there is no genuine issue as to any

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material fact and that the moving party is entitled to a judgment as a matter of law.’” Rye

v. Women’s Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235, 250 (Tenn. 2015) (citing

Tenn. R. Civ. P. 56.04).

The burden to show that summary judgment is appropriate falls to the moving party.

“The moving party has the ultimate burden of persuading the court that there are no genuine

issues of material fact and that the moving party is entitled to judgment as a matter of law.”

Martin v. Norfolk S. Ry. Co., 271 S.W.3d 76, 83 (Tenn. 2008). The burden then shifts to

the nonmoving party. “[A]t the summary judgment stage, ‘[t]he nonmoving party must

demonstrate the existence of specific facts in the record which could lead a rational trier of

fact to find in favor of the nonmoving party.’” TWB Architects, Inc. v. Braxton, LLC, 578

S.W.3d 879, 889 (Tenn. 2019). To satisfy this burden, the nonmoving party must do

“something more than simply show that there is some metaphysical doubt as to the material

facts.” Rye, 477 S.W.3d at 251 (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio

Corp., 475 U.S. 574, 586 (1986).

ANALYSIS

Houston County argues that the trial court erred in construing the Letter of Intent in

a manner that is contrary to: (a) this Court’s prior decision in this case, (b) Acute Care’s

judicial admissions in this case, (c) the plain language of the Letter of Intent,2 and (d) the

extrinsic evidence in the record.

For its first argument, the County asserts that the trial court’s ruling conflicted with

a statement by this court in Acute Care I, which the County argues constitutes the law of

the case. The quote from our prior decision reads:

If the purchase of the hospital closed by the agreed-upon deadline, the county

agreed to repay [Acute Care] for the amount loaned; however, if the

purchase of the hospital did not close by the deadline, the county was

not obligated to repay the loans to the hospital.

The Letter of Intent, signed by Acute Care, Houston County, and PCMC, was a binding

agreement, unlike some letters of intent. While Houston County would characterize the LOI as a “limited

framework” for negotiating a contract, we have held that “merely because the document signed by the

parties was expressly designated to be a ‘letter of intent’ does not preclude it from constituting a valid

contract.” APCO Amusement Co., Inc. v. Wilkins Family Restaurants of Am., Inc., 673 S.W.2d 523, 527

(Tenn. Ct. App. 1984). Moreover, the parties stipulated that the LOI is a valid and enforceable contract.

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Id. at *1 (emphasis added). Relying on the above quote, the County insists it cannot be

held liable for breach of contract because the purchase of the hospital did not close by the

deadline. The trial court disagreed with this conclusion, and we agree with the trial court.

The County’s reliance on the quote from Acute Care I is misplaced because that

ruling also held that “[u]nder Tennessee law, if Houston County prevented the [closing]

from occurring, then Houston County was liable for breach.” Id. at *5. As we noted in

Acute Care I:

[N]on-performance of [a] duty when performance is due is a breach, and that

has the further effect of excusing the nonoccurrence of the condition itself,

so that performance of the duty that was originally subject to its occurrence

can become due in spite of its non-occurrence.

Id.

Resultingly, we find the County’s law of the case argument unpersuasive.

Next, the County argues that the trial court erred in construing the contract in a

manner that is contrary to Acute Care’s judicial admissions in this case. The County relies

on Acute Care’s responses to the County’s Statement of Undisputed Material Facts in the

context of the County’s motion for summary judgment prior to the first appeal.

The three responses at issue read:

The LOI addressed which party would be obligated to pay for the amounts

that [Acute Care] contends it paid on behalf of and for the benefit of the

Hospital in the event that the closing under the terms of the LOI did not occur.

Pursuant to the LOI, Houston County was obligated to reimburse [Acute

Care] for funding for certain improvements and operational expenses only

if and when the closing as defined in the LOI occurred.

Pursuant to the LOI, [Acute Care] was to look to one or more of the

promissory notes executed by PCMC for repayment of the amounts it

contends it paid on behalf of and for the benefit of the Hospital in the event

the closing did not occur.

We, however, find this argument unpersuasive for the same reason as the prior

argument. As the trial court correctly ruled, the purchase of the hospital did not close prior

to the deadline due to the County Mayor’s failure to follow the directives of the County

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Board of Commissioners directing him “to execute” the closing documents. Therefore, the

County may not rely on the fact that the purchase did not close in its defense.

For its third argument, the County contends that the trial court erred in construing

the contract in a manner that is contrary to the plain language of the contract. We agree

with the trial court, finding that this argument fails for the same reasons as stated

immediately above.

The County’s fourth argument is that the trial court’s ruling is contrary to the

extrinsic evidence, citing Acute Care’s course of conduct following the execution of the

Letter of Intent. We discern no error in the trial court’s ruling, finding that the extrinsic

evidence argument fails for the same reasons as the County’s foregoing contentions.

II.

The County additionally contends that the trial court erred in granting partial

summary judgment in Acute Care’s favor based on an erroneous construction of the

contract and when material issues of disputed fact exist.

We have sufficiently addressed the first part of this issue in the above section, and

see no need to analyze further the issue of whether the grant of summary judgment was

based on an erroneous construction of the contract. As for the second component of the

stated issue, whether the trial court erred by ruling that the material facts were not disputed,

we find no error with this holding.

We conclude, as did the trial court, that the material facts are not in dispute. As the

trial court explained in its ruling, quoted above but repeated here to address the issue: